Outlook for Clean Energy Budget: Dollars Fall, Diversions to Continue

Diversions may dip slightly, but funneling money away from its intended purpose has cost fund some $1.5 billion over past seven years

The state’s budget for funding clean energy is shrinking once again.

The Office of Clean Energy is proposing to spend $166 million in the upcoming year, down from the $208 million it expected to spend in fiscal year 2017 on new commitments for energy efficiency, renewable energy, and other programs.

The state said it will maintain the overall clean energy budget at $344 million, the same level as the current year, but that number is inflated by money being diverted for other uses — paying utility bills at state buildings; patching holes in the state budget, which ends in June 30; and addressing issues at NJ Transit.

Those diversions, now at $208 million, will dip to $183 million, continuing a trend of relying on unspent Clean Energy Funds to pay for unrelated programs, a pattern that has cost renewable energy and energy-efficiency efforts more than $1.5 billion over the past seven years.

Those recurring raids have angered clean energy advocates and consumer advocates, mostly because the program is funded by a surcharge on customers’ gas and electric bills. Indeed, there is a bill pending in the Legislature (SCR-151) that would prohibit such diversions from occurring, although its future is uncertain.

Clean energy proponents argue the state should be stepping up its efforts to invest in reducing energy use and promoting less polluting ways of producing electricity, not spending less.

“What it shows, these raids have consequences,’’ said Jeff Tittel, director of the New Jersey Sierra Club. “It means there will be less money for rebates for energy-saving appliances like refrigerators and furnaces.’’

“It is a travesty for ratepayers to pay a fee on their bill to invest in cleaning up the air and clean energy technology and have it diverted to other uses,’’ said Ed Potosnak, executive director of the League of Conservation Voters of New Jersey.

For residential customers, the surcharge, dubbed the Societal Benefit Charge, runs between $70 annually for an electric bill and up to $90 a year for gas. For businesses, the cost is much higher, depending upon how much energy they consume as part of their operations.

The SBC is projected to raise $345 million in the straw proposal offered by the Office of Clean Energy, the same amount it raised last year for the Clean Energy Program.

In the fiscal year 2018 proposal prepared by the Office of Clean Energy, the bulk of the clean energy program will be spent on $143 million for energy efficiency projects. The renewable energy program will be allocated $2.6 million, and distributed energy projects — localized ways of producing power — will get $8.7 million. The administration of the program will cost $6.8 million.

In the staff straw proposal, the budget is intended to “recognize the value of energy efficiency as a foundational energy resource that, when delivered cost effectively, reducing the cost of energy for all ratepayers while providing additional benefits, including the health benefits associated improved air quality, lower environmental compliance costs, increased grid reliability, and economic opportunities in the form of local jobs and a more competitive business environment.’’

As in past years, the program also has prior year commitments of money outstanding. For the fiscal year 2018 budget, it is projected to be $147 million, bringing total expenditures to $494 million, down from the prior year’s overall expenditures of $548 million.

“It’s a fitting end for the (Gov. Chris) Christie era,’’ said Doug O’Malley, director of Environment New Jersey. “Now we are going to divert more funds than are being spent on clean energy. This is not a welcome trend.’’